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Foundation CIC
The third, and perhaps the most significant of the three arms of Foundation, the Foundation CIC is a Community Investment CorporationThe Community Investment Corporation (CIC): A Vehicle for Political and Economic Empowerment of Individual Citizens at the Community Level that would ultimately be responsible for virtually all the physical facility and venture development in TMP. It would be the core financial institution for TMP and its key mechanism of property development and venture creation on Earth and in space. Beginning the Space Development Process As has been noted repeatedly in other sections, space advocacy is about show-biz while space development is about real estate. Pare away all the details in TMP and what you essentially have is a plan for making interesting –and hopefully better– new places for people to live. That’s the whole point of TMP, the whole point of space colonization itself. Once you understand this you realize that the task of space development is not very different from that of conventional real estate development. It’s just doing it on a very grand scale in a very different environment. As a ‘community investment corporation’ following the model of CICs devised by economist Louis Kelso, the Foundation CIC would function predominately as a real estate developer for properties on Earth and in space but, unlike a typical commercial developer, would employ a system of co-ownership and co-investment among the residents of all communities it helped create, allowing the collective population of all settlements in TMP to sponsor the further development of settlements that aren’t necessarily economically practical by traditional models of speculation. Now, a great many space enthusiasts have difficulty with this premise, due largely to their interpretation of the concept of a ‘frontier’ and because most people the world over are fundamentally dissatisfied with their homes and the commonly exploitative systems through which they are forced to acquire them. Real estate is generally regarded as a game where only the rich people win and everyone else gets stuck in life-long indentured servitude. This would seem to have nothing to do with space because a frontier is supposed to be about unlimited personal freedom –a notion often embodied by fantasies of space colonization through some process akin to 19th century homesteading. The Problem with Homesteading Unfortunately, the notion of homesteading in space is unrealistic given any near-term technology and the basic logistics of living and working there. Even the advent of Post-Industrial technologies will not change this simple fact greatly. And the basic reason for this is that space presents very harsh environments that require sophisticated infrastructures with high built-in redundancy to support basic survival, let alone to provide a high standard of living. Consolidating infrastructures to economize on them and improve their reliability through their collective inertia is critical, thus the design of habitats will favor scale as a means to reliability and safety. (in other words, it’s easier to maintain a steady state in a 100 gallon fish tank than in a fish bowl because small changes have larger and faster impacts on smaller systems. A dime-sized puncture in the hull of a ‘personal’ space habitat would doom its occupants in minutes. In a city-scaled space habitat it would not become a critical threat for weeks, giving workers plenty of time to find and repair it.) Materials may be infinitely abundant in space, but they are not homogenously distributed and have very great distances separating them, requiring elaborate and sophisticated collection, processing, and transportation infrastructures to exploit them and a logistical strategy that deals in transit times of months or years. All this means a very great up-front speculative investment for colonization. Thus the reality of space colonization is that it must be based on the development of whole communities supported by the speculative investment of whole communities with the lifestyles offered likely to be urban in nature. Space homesteading is fantasy. Consequently, a realistic model of space colonization must account for the development of whole planned communities in remote environments –but on a truly grand scale. This is why –among many reasons– Marshal Savage originally regarded marine colonies as a logical precursor to space colony development and chose a form of arcology as the basic model for them. The open sea is the next-most remote environment to space and one that, harsh as it is, is still much more forgiving then the environments of space, costs less to reach, and has much shorter lines of communication to the rest of civilization. Thus it presents a logical proving ground for the logistical technology –the economic, organizational, and social systems– one must devise for space settlement, even if its construction and infrastructure technology are different from what one would use in space. The end product may be a bit different but the process is essentially the same, and getting that process right before you start betting billions in space is critical. Contrary to the mythology commonly promoted in public schools, only small groups of religious fanatics came to the New World in search of ‘freedom and liberty’. For the most part, New World colonization was driven entirely by a pursuit of profit. It was all about upper-middle-class –merchant class- entrepreneurs who devised ventures for the exploitation of easily obtained and easy to ship resources –basically, whatever you could grab at-hand or trade with natives for from near the coasts– with good value on the European market and then sought investment for these schemes from among their contemporaries. Initially, no one went to the New World with any anticipation of staying there indefinitely. This was the ‘godforsaken wilderness’. These people were in pursuit of the good life and you couldn’t live the good life roughing it 1000 miles away from all the stuff that the good life is based on. So they were there to get rich enough to pay off their debts and investors in as short a time as possible with enough left over to live well in Europe for the rest of their lives and then get out, usually selling their exploitation rights to other venture capitalists. Most didn’t expect to spend more than a decade in the New World. Any permanent settlers were people who got ‘stuck’ in some way, often runaway indentured servants and slaves who, for the most part, didn’t survive long far from any organized community unless they could team up with each other in significant numbers or with natives who were as likely to kill them on principle as to accept them. Over time the major settlements became larger and more developed, military outposts were created by the Mother Country to protect (and police…) them, transportation links to the Old World became routine, and, having depleted the at-hand resources near coasts, venture colonists had to push father along them and into the interior along rivers –which provided bulk transportation– in search of new resources to exploit, which was a better investment risk for European investors because of the security and proven results very developed settlements offered. Later waves of colonists found they could now enjoy a very European standard of living in these major settlements and on their personal plantation/estates if they could make enough money to afford the full spectrum of manufactured European goods ships brought in from the Old World and sold to them at a premium. Lower class colonists found they could now look to employment among these venture colonists or the leasing of small farming parcels from them as a way to build wealth and to have a better quality of life than the increasingly squalid European cities could offer. This is what turned a godforsaken wilderness into someplace people might actually consider staying in and living that good life they previously had to return to Europe to enjoy –though you had to be pretty rich to compensate for that import premium. And this was also the primary mechanism of colonial dependency on the Old World; crude bulk exports from the colonies in exchange for high-tech manufactured imports colonists couldn’t make for themselves which insured that wealth still had to communicate back to the Old World to be spent and enjoyed and thus could still be taxed. What ultimately upset this system in the New World and started the American colonies down the road to revolution was not some ‘yearning to be free’ as the American mythology would suggest. It was, quite simply, market competition. Market prices for colonial exports started to decline as colonialism around the world expanded. This meant that to make the same amount of money one had to move more product on ships that had pretty much reached a plateau in their scale and cost efficiency. At a certain point, the shipping overhead made it impossible to profit on a whole shipload of a given commodity. This left the venture colonist with only one option; he had to increase the unit value of what he was exporting to cover the difference. That meant he had to locally process the resources he was exploiting in more sophisticated ways. He had to industrialize. Sugar had to become molasses and rum. Cotton had to become textiles. Animal pelts and skins had to become cured leather and finished hats, gloves, and coats. This pursuit of perpetually higher value export products through increasingly sophisticated local processing brought the New World up to an industrial and technological parity with the Old World. Eventually, those later generation venture colonists started to realize that they could really enjoy the good life in the colonies without having to buy much, if any, European goods at their premium prices. This created a robust domestic market independent of the Old World and the savings on imports added to a pool of local investment capital to drive further development in the colonies independent of European investment. Once the Old World became economically irrelevant to people in the colonies, they started to question the Mother Country’s right to tax them and –more importantly– control use rights to ‘their’ colonial land. The rest of the story was inevitable. The homesteading phase of western American expansion, which so many space advocates are enamored of, was really no different from later colonial development with the exception that it had a domestic eastern capital base for its investment and a lower social class was able to get into the venture game. Again, the only people who went west in search of ‘freedom and liberty’ were religious fanatics. Everyone else went there with the hope of getting rich, relied on loans to pay their way over and buy their tools, livestock, and land, had to pay that debt with export goods and, just as with previous colonialism, the sacrifice in standard of living this initially demanded meant most of these people initially intended to spend their accumulated wealth back east. And just like in colonial times, the whole game initially depended on an exchange of minimally processed resources and low-tech products from the west for industrial goods from the east. The notion of homesteading as based on self-sufficiency is myth. They could be self-sufficient but only for limited periods of time since they had debts to pay and needed industrial goods to live comfortably –if not to survive. Just about everyone who went west carried a debt on his back to bankers and investors in the east. So why this history lesson? Because we need to understand how colonization actually worked in the past to understand the nature of the situation of colonization in space. All the financial mechanisms on which New World colonialism was based are essentially the same today. Venture capital, insurance, real estate, stocks. None of these have really changed in a significant way since the 17th and 18th centuries. And no matter where or when in history it has taken place, colonization has depended on one simple economic factor; the availability of something in the new place whose market value in the old place was sufficient to cost-justify the effort/investment of going to get it. And that factor is where we run into trouble in space and explains why the First Space Age went bust. Catch-22 Bottom-line; there’s nothing in space that has sufficient market value on Earth to justify the cost of going there to get it. This is going to be an essential fact of life with few exceptions for a long time into the future. The wealth you can potentially build in space can only be spent and enjoyed there as long as there is no means to communicate it back to Earth. This might not seem like a problem if your goal is to go and stay in space except for one thing; if you can’t pay for the trip yourself you have to be able to borrow it from someone who can and pay them back with interest. How much interest you can offer them determines how willing they are to loan you the money and how much risk on the venture they will tolerate. If there’s nothing you can profitably send back to sell, what are you going to pay your lender back with? Likewise, if your standard of living depends on consumable goods you can’t produce where you are in space and can’t trade what you can produce for, what do you buy them with? This is the essential problem of space colonization. How do we overcome this Catch-22? Well, from a functional standpoint one can use the lesson of the situation that precipitated the American Revolution; economic independence through industrial parity. If your initial colonization effort is robust enough to establish the industrial capability to produce everything a high standard of living calls for then trade with Earth becomes irrelevant and colonists can confidently go to a settlement with the anticipation of it being a one-way trip they won’t regret. But this, of necessity, means a much grander initial settlement development plan than was ever typical in colonial times. Initial venture colonists had no anticipation of staying where they were going so their plans were as lean on up-front cost as possible to help maximize return. A very benign natural environment compared to space helped greatly in this respect. There was a lot of at-hand resources your could use to survive with. Later colonists had the benefit of a pre-established infrastructure they needed only to build upon. But here we’re talking about something akin to the Jamestown venture building a 20th century Manhattan on arrival! So the up-front investment would be vast and, owing to the lack of homogeneity of resource distribution in space, an infrastructure spanning vast areas of the solar system. And it all has to be money invested speculatively on a dividend that exists only in space. How does one pay for that, barring the unlikely prospect of gathering a community of 1000 Bill Gateses all eager to move to Mars? Clearly, a very different economic model of development becomes necessary in space. Marshal Savage believed that to make space colonization work one needed to cultivate a whole society where this was a cultural imperative irregardless of any economic rewards. You went to space because, in the culture of this society, that’s what civilized people do. It’s space colonization as cultural expression. Space development as performance art on a grand scale. The most important objective of Foundation is to establish the foundation of this unique forward-striving culture, though the primary engine of its creation would be the Aquarius phase where this culture becomes the basis of a large population. Readers of the original TMP very often overlooked the actual scale of things it was proposing. Aquarius is not one place. It’s a community of marine settlements which would potentially collectively represent a population and economy equivalent to a major European nation. It’s that big because that’s how far you have to spread the cost and speculative risk of something like space colonization to make it convenient for a whole society to pursue. People living in Aquarius wouldn’t be preparing themselves to personally colonize space. Most may never do more than visit Earth orbit or the Moon. They would be investing in a place for their children to go to because the dividends of their investment aren’t to be had on Earth or in the very near-term. But what sort of financial institution/system would make an idea like this work? Governments are typically charged with the task of investing taxpayer money in ‘public works’ of grand scale. But the reality of the historic role of government in past colonization was that it was never actually directly invested in by government and only encouraged or tolerated among private investors and entrepreneurs for the purpose of expanding tax revenue and running property rights rackets. So, despite the lip-service national space agencies often give to space colonization, no government is ever likely to support it beyond the creation of exploratory outposts. Why? Because no government will invest in the development of a place people can go and make money in out of the reach of the tax man. As long as wealth in space is non-communicable to Earth, space itself is irrelevant to any government. What is needed then is a very different and truly publicly responsible economic institution/system which appears to existing governments –jealous and violent gods as they typically are– as something very conventional and unthreatening and yet can serve as a mechanism through which the cultural imperative of space colonization can be realized. Hence we arrive at the Community Investment Corporation. Community Investment Corporation The concept of the CIC was first invented by economist Louis Kelso –the inventor of the Employee Stock Ownership Program– as a mechanism for development in economically disadvantaged communities. Kelso believed that the conventional mechanisms of Capitalism could be made more economically just and socially progressive if adjusted to maximize the potential for personal ownership in the infrastructure that supported the standard of living. In other words, he felt that you made a fairer society not by redistributing ‘wealth’ but rather by redistributing ‘ownership’ in the means to wealth. A contemporary of the legendary Buckminster Fuller, the two teamed up on an ambitious project known as the Old Man River City project which was intended to revitalize the economically disadvantaged Mississippi Delta region through the creation of a futuristic planned super-city. A CIC was to be the basis of this project and was intended to work as a means of empowering the poor of the region through shared ownership of the city itself. Everything in the city was ostensibly owned by the CIC –the original property donated by the government. Some of it would be commercially developed generating a profit on lease that paid for continued development work and/or the business loans financing it, some might be sold outright, while the rest of it was to be granted to citizens for residential use through self-liquidating loans of CIC stock which translated to use rights for a certain amount of property within the city. These loans were self-liquidating by virtue of their dividends which, as the CIC profited on the commercial use and increasing value of its developed property, would increase with the value of the CIC stock. This not only allowed a disadvantaged population to gain access to housing they could not have otherwise afforded, but also created a means for their own building of personal wealth. To further support this process, the plan also called for the implementation of Employee Stock Ownership Programs and Consumer Stock Ownership Programs for commercial enterprises within the community. Through these mechanisms both the workers in local businesses and local consumers of their products would earn ownership in the companies operating in the community. Thus everyone in the community would effectively become a direct co-owner of virtually everything in the community and all would share in its growth and have incentive to support that growth. This is one of the first comprehensive non-zero-sum economic schemes. Unfortunately, at the time the Federal government had more ‘important’ things to worry about than building futuristic cities for poor people in the south… like the Cold War. The Foundation CIC would function very similarly to the original Kelso CIC with a few important differences. The most important would be that it would not be limited to one community but rather all settlements ultimately developed as part of TMP –ultimately all over the solar system. The Foundation CIC would also engage in venture capital investment in support of commercial development within its communities and with relevance to the objectives of TMP. These ventures would be required to support ESOP and CSOP use as part of their business models as long as they were located in Foundation CIC communities. Because government land grants are unlikely to be found in any western nation, the Foundation CIC may have to start out as a very conventional, if non-profit, real estate investment company supported by the credit of founding members and their voluntary donation of personal profit in order to build, though constant reinvestment, a portfolio of properties large enough to support the direct acquisition of property or the investment in ‘making’ it. That’s one’s powerful advantage Foundation has as a real estate developer. Everyone else in the world has to buy land owned by someone else. Hence the common adage among people in real estate that the value of property must ultimately always go up because no one is making more if it. Through Aquarius, Foundation can manufacture it on-demand anywhere in the world! The Foundation CIC would function as a mechanism in support of space colonization through its ability to collectivize the shared wealth and co-investment of an entire society and to likewise spread the risks of real estate development –even in space– among that vast population. This may allow the Foundation CIC to provide virtually all the services any government or municipality does without directly taxing its population –which is important since for a long time its communities would still be within the political boundaries of existing old-fashioned nations that would, of course, insist on still taxing their residents. But it would also allow the speculative investment in vast scale projects at an almost imperceptible risk to the individual. The investment in the development of Asgard, for example, might come down to nothing more than a few cents or dollars in annual dividend of Foundation CIC stock given Aquarius development of sufficient scale. This system would also allow equity built in space at a distance to become fungible with that on Earth even when there is no possible communication of material and thus no market exchange between Earth and space. The shares one owns in the CIC would represent rights to use of a certain amount of physical space within any Foundation CIC community. The relative exchange rate would, of course, fluctuate from one community to another according to the relative demand for space and the limits of available space. But through ownership of CIC stock any resident of a Foundation CIC community on Earth has the option to claim use of property in any Foundation CIC community in space as a consequence of the initial investment in development. According to how efficient local development in space becomes after initial settlement, this would translate to a potentially large amount of space use rights as a consequence of the local dividend earned in space. This could be used for residence, commercial activities, sold to others, or leased to others with no CIC stock of their own. So even though actual homesteading in space is impossible, through the development of a Foundation CIC there is a means to what Louis Kelso called ‘capital homesteading’ in space. And thus we arrive at a powerful and specific financial mechanism for focusing the productivity of an entire society toward community development and the goal of space colonization. Parent Topic *Foundation Peer Topics *Foundation Community Network *International Open Space Initiative *Foundation Media Sub-Topics *Portfolio Development Project *GreenStar Properties *GreenStar Securities *GreenStar Credit Union *GreenStar Community Cooperative *GreenStar Ventures *GreenStar Industrial Cooperative *GreenStar Free-Market Exchange Network Phases References Category:Foundation CIC